3 ways Open Banking can help SMEs boost cash flow

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Jul 15, 2022 · 4 minutes

Account-to-account payments powered by Open Banking are no longer an alternative payment method just on the horizon – it’s becoming mainstream, and with this comes the opportunity for small to medium-sized enterprises (SMEs) to leverage tech to boost much-needed cash flow.

Business is getting tougher, and SMEs need a firm grip on cash flow amid economic and supply chain troubles, coupled with a slower-than-expected pandemic recovery. Research from business lender Iwoca found that 52% of accounts cited a ‘squeeze on cash flow’ as their biggest financial issue. Having a positive cash flow can result in a business flourishing or going under. Money coming in, money going out, money put aside and forecasting all play a huge role in the success of any business.

The report entitled, “Open Future: What does Open Banking mean for accounting firms?” found that:

Open Banking leads to more thorough, accurate and up to date data for cash flow forecasting apps. And secondly, this live data feeds into easier finance application processes for small businesses. The overall result is faster access to vital funds for businesses in need of urgent cash injections.

Open Banking was born out of a regulation called the Payment Services Directive (PSD2) in 2016. This EU legislation enables customers to exercise more control over their financial data, and in 2018 Open Banking became mandated by the Competition and Markets Authority (CMA). This government-led service is regulated by the Financial Conduct Authority (FCA) and allows banks and authorised third-party financial service providers to have secure access to banking and other financial data. Essentially, third parties can enable push payments directly from your bank account, also known as account-to-account (A2A) payments, resulting in faster, fairer and more seamless payment journeys which far out-compete traditional and outdated methods of payment.

Learn more in our complete buyer’s guide to Open Banking payments.

Vyne’s Pay with bank solution comes with heightened security, resulting in less fraud, lower transaction costs as traditional card intermediaries are cut out, a superior customer experience that drives conversions with a faster checkout and funds settling almost instantly. With a track record of working across various sectors, including retail, travel, automotive, SMEs and financial services, Vyne’s research and use cases deliver proven benefits that SMEs can leverage:

Open Banking cash flow boosting benefits

1. Lower transaction costs

What it is: When businesses receive payments for services rendered or goods purchased, traditional payments require several intermediaries before payment is made and settled. This results in card transaction fees that can range from anywhere between 0.3% and 4%.

Why it matters: Intermediaries, including card gateways, acquirers, fraud engines and issuing banks, are removed and a saving of up to 80% on transaction fees can be made. A2A payments open up pathways for the consumer to pay directly and securely from their bank account to that of the merchant. The lower charges equate to money in the pot.

2. Instant settlement


What it is: Open Banking payment rails give businesses the ability to receive funds almost instantly. By cutting out intermediaries, several extra steps are bypassed to deliver a seamless, fast and secure payment. Options available for collecting money include one-off payments and recurring payment links, which remove the stress and heavy lifting. Real-time payment statuses, a solution built by Vyne, provide the transparency and confidence businesses need on the status of their funds.

Why it matters: If you're an e-commerce business, this means when a sale is made, money usually arrives into your account instantly. With traditional card payments, it can take up to two or more days for funds to land. Money is available to invest in more stock and other parts of the business. The power of Vyne’s real-time notifications gives businesses peace of mind that they can send out their products knowing the money has landed in their bank accounts.

3. Better cash flow management

What it is: A2A payments remove all the bottlenecks and make it easy for businesses to manage their transactions, which results in an improvement in cash flow and liquidity. Vyne’s dedicated merchant portal gives businesses a clear view of the payments they have received with real-time payment statuses. The portal also gives businesses the ability to view transaction history, reconciliation statements and offers net settlement billing.

Why it matters: Whether forecasting or managing stock levels, an accurate view of cash flow coming in and going out is at the heart of any successful business. We know that reconciliation can be time consuming, with businesses losing time reconciling payments. Instead of having to reconcile every payment, our end-of-day batch sweeping makes reconciliations effortless. One batch payment each day – job done! With net settlement billing, no management of incoming and outgoing payments is necessary. With Vyne businesses have a view of all fees deducted for each individual transaction, which removes the heavy lifting needed to process multiple payments into their account. We provide a clear picture with no extra work required.

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